Lloyds to buy MBNA from Bank of America for 1.9 bln pounds

Reuters Staff

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LONDON, Dec 20 (Reuters) - Lloyds Banking Group said on Tuesday it had agreed to buy UK consumer credit card business MBNA from a unit of Bank of America for 1.9 billion pounds ($2.35 billion) in cash.

The deal, which is expected to close in the first half of 2017, includes around 800 million pounds of acquired equity and assumes 240 million pounds for future PPI claims, Lloyd's said in a statement.

The British lender said it would fund the deal through organic capital generation, which would use up around 80 basis points of common equity tier 1 capital.

Despite that, the bank said it remained confident of being able to deliver a progressive and sustainable ordinary dividend in 2016.

MBNA, which made after-tax profits of 123 million pounds in the first half of 2016, would add 650 million pounds a year to group revenues, Lloyd's said, adding it expected to make cost savings of around 100 million pounds. ($1 = 0.8073 pounds) (Reporting by Simon Jessop; Editing by John Geddie)